Personal Finance: How to find a certified financial planner

There are tens of thousands of certified financial planners in the United States, according to the CFP Board, the organization that grants certification, and many more planners and advisers who are not certified.

The quest to find the planner who is right for you begins by understanding what it means to be certified and knowing the qualities every planner should possess.

Only one organization can certify a financial planner

For a financial planner to become certified, he or she must fulfill the requirements of the nonprofit CFP Board. These requirements are based on four criteria: education, examination, experience and ethics.

Never miss a local story.

Sign up today for unlimited digital access to our website, apps, the digital newspaper and more.

Once a financial planner fulfills these requirements, that professional is then authorized to use the trademarked CFP certification marks in the United States.

When trying to find a financial planner, check for the CFP certification logo, but don’t stop there.

Research your CFP and run a background check

You will need to narrow your search within the more than 70,000 professionals in the United States who meet CFP Board requirements.

Enter the planner’s basic information into the CFP Board Web form, and the results will tell you whether your planner is currently certified, was certified at one point but is no longer, if he has been disciplined by CFP Board or if he has had a bankruptcy filing within the last year.

Questions to ask any potential CFP

▪ What is your experience? All CFPs are required to have a minimum of three years experience. Ask how his experience relates to his current practice.

▪ What are your qualifications? Ask about his credentials and how he stays up to date with changes in the field.

▪ What are the services that you offer? Financial planners cannot sell insurance, or securities like stocks, without proper licenses. They also can’t give investment advice unless they are registered with the appropriate authorities.

▪ How do you approach financial planning? Make sure the planner’s investing philosophy isn’t too aggressive or too conservative for your agenda and needs.

▪ Who are your clients? Some planners require clients to have a minimum net worth. Others require certain assets. Find out the type of people the planner works with to ensure you fall into that category.

▪ Will I only be dealing with you? Some financial planners handle all clients directly, while others work with a team. If there is a team (such as tax professionals or attorneys), ask to meet them.

▪ How do you prefer to be paid? Planners can collect commissions, fees or both. Make sure payment procedures are written into the agreement.

▪ What do you charge? Payment varies depending on your situation, but the planner should give a clear estimate of hourly rates or flat fees, or a commission percentage.

▪ Who else benefits from your advice? Ask for a written list of potential conflicts of interest. CFP professionals are governed by a strict code of conduct that requires them to put your needs above their own.

▪ Has the board disciplined you for any unethical or unlawful actions? Ask which organizations regulate the planner and reach out to these groups for a background check. The CFP Board, the Financial Industry Regulatory Authority, and insurance and securities departments in your state maintain these records.

Finding a planner and planner fees

Beyond the CFP Board, a good place to look for a planner is the National Association of Personal Financial Advisors, which is the country’s leading organization of fee-only planners. The Garrett Planning Network is a group of fee-only planners who make their services available to even the smallest clients.

Why is “fee-only” important? According to The Wall Street Journal, fee-only planners receive payment only from their clients, which means they accept no commissions and act only in the interest of their clients.

“Most advisers charge a fee based on their percentage of assets under management,” said Joshua D. Duvall, CFP and financial adviser for Cordasco Financial Network in Philadelphia. “You really shouldn’t pay more than 1.5 percent per year, and that should include more than just money management. It should include financial planning and advice as well.

“Other advisers use a retainer model based on an annual fee, a percentage calculation or some other factor like the client’s AGI or net worth. Whatever the mode, make sure you, as the client, understand it and are OK paying the fees going forward.”

Duvall advises watching out for common pitfalls like judging a planner on a “transient feature” such as last year’s investment performance. Also, make sure you are dealing with an actual planner and not “a broker, insurance salesman or annuity pusher.”

In the end, choosing a planner is about selecting someone who shares your values, beliefs, perspective and outlook.

“My bottom line,” Duvall said, “is that individuals shouldn’t be so focused on the financial products, potential returns or fancy slogans. Instead, they should look for a qualified CFP who shares the same ‘DNA,’ so to speak, as the client, and is willing to build a strong relationship.”